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How CX can help the insurance industry survive in 2020 and beyond

Blog
19th May 2020

As insurance firms compete to adapt to swiftly changing consumer demands and the prospect of an economic downturn in the first half of 2020, Webhelp UK region CEO, David Turner considers how moving on from legacy environments and integrating customer experience (CX) innovation, with emotional connection can really change the game for this industry.

There is no denying that the Insurance sector has been under pressure to switch up its digital game for a number of years now – in fact, as far back as 2018 I suggested that more focus on CX was critical as insurance companies began to undergo digital transformation programmes.

More recently, our 2019 YouGov powered research, published in our Whitepaper on Emotion in Customer Experience, proved that the industry still has a long way to go in making connections and using CX to really resonate with its customers – something that will be absolutely imperative in the COVID-19 era.

In our exclusive poll of over 2,000 UK adults, worryingly, only 4% of respondents indicated that they feel any kind of emotional connection with brands in the insurance sector. Perhaps, the insurance industry has suffered in the past by the impact of dated legacy environments and late adoption of innovation and new technology – this is likely to have created an emotional dislocation between customers and providers.

However, this gap (if addressed carefully) could present a unique growth opportunity for insurers, as our research also showed that customers who are emotionally connected to a brand are 55% more likely to purchase other products/services from them and 63% are more likely to recommend them to family and friends.

Better emotional links and increased connection, would certainly be beneficial at the moment, as many companies and individuals will be expecting the insurance industry to buffer ongoing financial loss during the COVID-19 crisis.

As well as remuneration, impact will extend into many other areas – from employee and business continuity issues, client service considerations, compensation and employer liability and event cancellation, and finally class actions relating to the pandemic.

Obviously, the immediate concern for many insurers will be protecting the health and safety of their employees and partners in the agent and broker communities, as the industry – like many others, struggles to maintain business continuity.

However, as Deloitte, a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax, and related services reveals:

“The bigger-picture concern is how the outbreak might affect the economic environment—specifically, prospects for growth and profitability in insurers’ underwriting and investment portfolios.” Source: Deloitte Insights

As early as March, The Organization for Economic Cooperation and Development (OECD), reported that the coronavirus outbreak has significantly weakened near-term global economic prospects, stating that:

“Together with the recent marked deterioration in global financial conditions and heightened uncertainty, this will depress global GDP growth in the early part of the year, possibly even pushing it below zero in the first quarter of 2020.” Source: OECD.org

At the same time, the probability of declining interest rates will create waves in the entire insurance industry, most especially in the life insurance and annuity sectors.

This will quickly become a race for survival, and insurance companies that do not rethink their business, transform and offer innovative digital services, and centre the experience around what the customer wants will fail to gain traction in this new world.

In addition, as this recent research from polling experts YouGov highlights, the pressure is mounting for the industry to attract and retain customers. In fact, only 6% of UK customers intend to stay with their current provider, and almost three quarters (73%) of policyholders are actively shopping around for alternatives.

So, what do insurance customers want – and how can excellence in customer experience help deliver this, under crisis?

Hervé Mazenod, Managing Director for Insurance and Investment, at Gobeyond Partners – part of the Webhelp group, believes that this can be boiled down to a few key principles, with simplicity being the most important:

“Today’s online consumers have high expectations of insurance companies – they want competitively priced, clear and simple policies that they can apply for and activate in just a few clicks – without lengthy registrations, calls and delays.”

“While many customers will have expected some interruptions as an inevitable consequence of COVID-19, they will rapidly expect a more normal service to resume – at the same time as insurers putting the safety of their people and their customers first.

He goes on to explain that this desire for 24 hour access to policies and information will only grow as the crisis forces previous slow adopters (like the elderly) to have increased familiarity with the digital world, saying:

“It is likely that COVID-19 will have accelerated consumers’ preference to online channels. This will significantly stretch those firms which have not yet equipped their systems and processes to adapt to and cater for this rapid digital transformation.” 

And insurance is a complicated consumer product, borne out of necessity (like car or business insurance) or for peace of mind, like home and personal cover. Consumer loyalty is shrinking and relationship building and platforms that inspire trust can help brands to build better experiences and drive scale.

As discussed, the pandemic will cause some fundamental behavioural shifts in consumers, Mark Palmer CEO for Gobeyond Partners recognises this and adds:

“Organisations will need to cut through the hype and start to anticipate what these shifts might be; how they may adapt to them or even influence them. By doing this, leadership teams can understand what the future blend should be between ‘pre-crisis’ ways of operating, and certain key elements of the ‘business-as-unusual’ phase.”
Source: A new race to evolve and thrive during COVID-19

It’s clear that CX (and particularly the ease of the end to end journey) will be critical in both responding to consumer behavioural shifts – especially on digital channels, and in engaging the customer base, which is crucial for the insurance industry.

Find out more about how our services can help your business achieve positive transformation and discover more of our leadership insight on Crisis business phases and how the game is changing for CX markets and channels.

 


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